The State Government will spend $32 million to build stage one of a 1,600-kilometre pipeline in the East Grampians region, in the hope of providing stronger water security for agricultural producers.

In a pre-budget announcement, Minister for Water Lisa Neville said the State Government was lobbying the Federal Government to fund the remainder of the $82.5 million project, which is expected to service 1,500 properties upon completion.

"I'm very hopeful given the business case is so strong that this will be supported by the Commonwealth Government as well," Ms Neville said.

"That business case said there would be $215 million of economic benefit if we invest in this project."

If fully funded, the pipeline is expected to service 530,000 hectares around Ararat, including the towns of Buangor, Moyston, Great Western, and Willaura.

Farmers reeling from poor rainfall

Grampians Wimmera Mallee Water (GWM Water) chairman Peter Vogel said farmers and agricultural producers in the region had been affected by below average rainfall over the past 20 years.

"The catchment dams are really getting low because there's been a distinct lack of rain," Mr Vogel said.

"What it will do is give security of supply, there's a lot of stock down this region … instead of de-stocking and putting in more crop they'll [producers] be able to keep their stock."

General manager at Mount Langi Ghiran Winery, Damian Sheehan, said the unpredictability of water supply in the East Grampians region was one his business's major stresses.

"For the last 20 years or so we've had some pretty severe droughts; the last 24 months have been right up there as well," he said.

Mr Sheehan said he was hopeful the pipeline would provide long-term security for his business.

"You've got more of an idea of what your production will be because you're mitigating one of those variables you have with mother nature," he said.

Construction could start within 12 months

GWM Water has been managing the development of the East Grampians pipeline, with the final design depending on how many landowners express an interest in signing up.

"The water is actually coming from Lake Fyans," general director Mark Williams said.

"It's a voluntary scheme, so what we do is go through a process of getting landowners to commit and once that commitment is there, we refine that design around that final commitment."

Mr Williams said other similar projects had seen landowners commit $12,500 to access the scheme.

"We can move as of today effectively and begin that process," he said.

"We'd like to think that probably within 12 months' time, even possibly sooner, we'd be putting pipe in the ground."

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